How badly did “FukTuk” Fuck Up? If at all?

I just had to use that title. “FukTuk” (with the fuk like some Brits say, well, you know...) is how Latvians often pronounce the acronym for the Financial and Capital Markets Commission, Finanšu un kapitāla tirgus komisija or FKTK, the financial markets supervision and regulatory commission. The agency has been getting a lot of criticism recently after the looting of Latvijas Krājbanka, the Latvian Savings Bank, and its parent bank, Lithuania's Snoras, by their main shareholder, Vladimir Antonov and his lackeys.

On the one hand, it would seem that by offering to resign, the head of FKTK (FCMC is the English acronym) Irēna Krūmane, has admitted that – here we go again – FKTK fucked up. But this is actually a wrong and ignorant interpretation of events, even if mistakes were made. The mistakes didn't concern the direct regulatory and supervisory functions of FKTK. It was more of a public relations problem (Krūmane, who was out of town, may have sent the wrong people with inadequate briefing on what to say, to explain the Krājbanka fiasco) and the problem of having to face down ignorant media and the public, screaming for someone's, anyone's blood.

Strictly speaking, Krūmane's resignation is like a head of the national police resigning because the crime rate isn't zero. Well, almost. To have a crime rate of zero, you would have to have one cop following, say, every one or two citizens (an impossibility) and also have absolutely no corrupt or fallible cops who could be persuaded to join, rather than fight criminals (after all there is a lot of money and excitement in crime).

That is not how the system of criminal justice and law works. It works mostly by self-regulation and a number of other individual and social mechanisms. Most people, for one reason or another, stay within sight of the boundaries set by The Ten Commandments, or at least those, that apply to transitive actions (those affecting the rights of others). That may exclude idolatry – the having of other gods, etc, and another “ultry” reserved for – adults – that goes with the coveting your neighbors' wife and all that. But it certainly covers stealing, slaying, and, to a large extent, bearing false witness. That is because you have to be pretty much of a sorry-ass, evil fucker to do any of that, and most people are not like that, or evolution would have reduced us thousands of years ago to a small, about to be extinct pack of upright apes snarling and fighting with each other for the last bananas in some remote jungle. That's not how things are.

Peer pressure and the need to have the respect of others are also powerful restraints on the urge to do any kind of batshit stuff, whether it harms anyone or not. Driving up to a cloister, blowing your horn in the middle of the night, waking the nuns and then mooning them standing on the roof of your car really doesn't hurt anyone and would make a great and gross teenage movie scene, but it is not what you want on the front page of the newpaper. Nor do you want to make the evening TV news for being shitfaced at the wheel of your car as the cameras show up and then go into a racist rant about Uigurs or some other obscure nationality as the police take you away. Nobody, well, almost nobody, wants that kind of shit.

It is more or less the same with the financial system. Like the police, Krūmane could reasonably go to sleep at night on the assumption that most of those she rides herd on would not simply up and break every rule for the hell of it. In fact, with two layers of checking and regulation provided by the internal controls and risk management of any financial organization, combined with regular checks by independent auditors, there is enough of a self-running system to keep things on the straight and level. Finally, there are the regulators, seeing to it that the others are at least equipped, set up and ready to do their jobs. This means credit committees, risk managers and a lot of double checking and signing off on stuff before any other people's money is utilized. That is what banks are – other people's and enterprises' money entrusted to the bank or other financial actor. One shouldn't fuck with that, nor go unpunished for doing so.

What happened at Krājbanka is that, despite most of the necessary checks, balances and scarecrows (the idea of being jailed in disgrace keeps fingers off the cash like a scarecrow spooks the crows)being in place, the bank's managing board chairman Ivars Priedītis did go batshit and pledge some LVL 100 million in assets as collateral for loans made to Vlad the dude with a sportcar jones and his various projects. Priedītis had been a pretty straight and honest guy before that, but the mo-fo simply went or was pushed over the edge into crime when he agree to sign off on the deals on an adventure of his own. Apparently, the rest of the bank management knew fuck-all about it, or maybe merely suspected something. They certainly didn't suspect Vlad, assuming that several national intelligence agencies could have the dude's past in Russia all wrong. So maybe he found the cash needed to start his bank in paper bag in a Moscow back alley. Hey, those were the days in the Wild, Wild East.

So what failed was not really Krūmane and the system under her. The system is based largely on trust (most information is not submitted by liars). What failed was one guy, perhaps a few more people going rogue. Some financial institutions with some of the best monitoring and internal controls have had traders cut loose and create enormous losses, if not bring the whole motherfucker down if they were unlucky enough. Taking the wrong side of some financial derivative instruments can cause losses big enough to warp spacetime around them, dwarfing anything that Priedītis pulled off. Lucky that that didn't happen in Latvia, which is not to say that it couldn't be done. Just most people in the business won't try it.

You can do all the checks and cross checks you want, but no system is God, and most run themselves adequately, thank you. It is foolish to think anything can or should be designed to be everywhere all at once. Don't blame the overseers for failing to do or be that.

By offering to resign, Krūmane has actually thrown herself on her sword as a PR stunt to restore some trust in the FKTK. The blogger and political scientist Iveta Kažoka made this point about trust in the financial system being undermined by Krūmane's communication style. Her appeal for Krūmane to resign was borderline strident. But for Krūmane it was probably a tactically right move to keep the dogs from tearing apart the institution by thowing herself to them (sword, now dogs is only a sign that it is late and I am tired from pulling all sorts of shit for my employer over the weekend in Stockholm to in order get and do an important interview). When it is all over, whoever takes her place should remember that sitting in that chair, no one will excuse you because sometimes things just happen (“honest Ivars” at Krājbanka went wacko), and they will crucify you for not being god even if you said you couldn't be.

More guns for a sick, sullen society?

One of my Twitter followers wondered when I would post something on guns and "gun control" in Latvia.  He linked to a Libertarian Party (?) position advocating more or less unrestricted gun ownership. The issue came up after the movie theater shooting in Riga on Saturday, February 19, when a well-educated, seemingly stable person with a legal weapons permit pumped four rounds into a father of four who had objected to his loud munching of either potato chips or popcorn and generally disruptive behavior during a showing of "The Black Swan".
The issue of gun laws in Latvia is a rather difficult one, because there is more too it than legalistic or libertarian arguments. Indeed, the murder suspect was a doctoral student in law who had written in a Latvian law journal arguing for very liberal gun laws like those in many US states. The man even advocated free ownership of fully automatic weapons.
I think the issue of firearms in any society is not so much a legal or philosophical issue (although there are important points in this regard) as it is about the fabric (or lack of it) in any particular society or country. There is merit, in the abstract, to the argument that an armed citizenry is theoretically better protected against an oppressive government, foreign invaders, or crime waves, than a society where only the state, criminals or invaders have guns. However, as "future scenarios" dictatorship, foreign invasion and wild-in-the streets crime are not likely or frequent occurrences if we take a relatively stable, democratic society as a starting point.
I would instead argue that the likelihood of tyranny or mad-dog crime has its roots in the nature of the society we are dealing with. The nature of the society, its "health" or whatever you want to call it, also determines the real consequences of any given weapons control policy. In short -- the reason there is relatively little gun violence (aside from a few spectacular incidents) in heavily armed Switzerland and Finland is because these societies do not have  a "gun culture".  Firearms are not used for everyday dispute resolution, they are generally not carried around on a day-to-day basis and while accessible, their only thinkable use is for military (Switzerland) or hunting (Finland, if I am not mistaken) purposes.
So we have the rather paradoxical situation that there is proliferation of legal military assault rifles in Switzerland, but almost no drive-by killings. In the US, fully-automatic weapons are banned, I believe, by federal law, yet there are places where killing and maiming with automatic weapons (drive-by style) is a routine occurence.
In armed countries with no "gun culture" we see the kind of outcomes that gun control advocates in the US and elsewhere want -- very little gun crime. In places with patchy, but sometimes severe gun laws (parts of the US with handgun restrictions, registration, etc.), we still see crazed gun crimes and automatic weapons firing on the streets. The difference is cultural and the lesson is that the nature of a particular society, its health or illness, trumps any laws or lack of them.
In Latvia, we do not have a "gun culture" and except for the actions of a psychopath in a movie theater, we have very few crimes involving firearms (indeed, many robberies are done with "objects resembling firearms" and there is little actual gunplay -- the recent battle between "good cops"  and "robber cops" in Jekabpils being an exception).  In this regard, Latvia feels safer than the US. Any everyday dispute between strangers here is unlikely to end in a shooting. In the US, one never knows. Of course, the crime news here in Latvia does carry stories of knifings and deadly beatings and other forms of non-firearm violence, but nothing can turn a bad situation to the worst possible than using a high-powered firearm.  Knives, clubs, even fists can kill, but a hollow-point 9mm round is very lucky if it DOESN'T kill.
My impression of Latvian society is that it is anomic (people trust no one), depressed, distressed and in a state of passive-aggressive anger (people vent their hostility by non-cooperation rather than direct action). I don't know if I would want to spread more firearms in such a societal environment. I fear there could be a quick adoption of a kind of gun culture, of using firearms to vent the simmering anger and the collective inferiority complex (left over from Soviet times and augmented by what has happened since) that one senses here.
Another matter is that most people are not trained or skilled at using firearms. This explains the number of accidental shootings in countries where guns proliferate. One can also imagine what would happen if there were more gun battles between untrained, poor marksmen in situations where rage, rather than cool training (as with professional military and police) was the driving force of a conflict.
It is difficult for me to imagine that allowing everyone in Latvia to own guns would result in the creation of a noble "armed citizenry" that used its weapons with restraint and skill, that intimidated both state authorities (the parts of the police that are little more than armed gangs) and criminals in order to maintain  both freedom and order. I just don't see that happening. More firearms in this society would simply increase the level and lethality of senseless violence.  That is, perhaps, an inadequate but best effort answer to the issue raised in a "tweet" last week.